US Markets
Onsemi to Acquire Synaptics in $7 Billion All-Stock Deal
Onsemi (ON) shares fell early Friday after the chipmaker agreed to acquire semiconductor company Synaptics (SYNA) in a deal with an enterprise value of about $7 billion, aiming to expand into physical artificial intelligence.Shareholders of Synaptics will receive 1.350 shares of onsemi for each share they own, representing a roughly 19% premium to the companies' 10-day volume-weighted average closing prices, according to a joint statement late Thursday. Onsemi shares fell 12% in the most recent premarket activity, while Synaptics rose 5.9%.Onsemi expects the transaction to accelerate its expansion toward intelligent systems through the addition of Synaptics' edge AI compute franchise and portfolio of human-machine interface and wireless connectivity solutions. The chipmaker said the deal is expected to expand its total addressable market by $30 billion to $243 billion by 2030.The acquisition will enable onsemi to "capture a significantly larger AI opportunity that extends beyond AI data center and into edge applications," Chief Executive Hassane El-Khoury said in the statement. "This transaction would add immediate connected compute capabilities, expand our software and ecosystem reach and position onsemi to deliver greater value as customers increasingly seek intelligent systems."The deal, which requires approval from Synaptics' shareholders and clearance from regulators, is expected to complete in the middle of next year. Synaptics shareholders are expected to own 12% of the combined company on a pro-forma basis, according to the firms."Together with onsemi, we will combine Synaptics' strengths in AI-native compute, connectivity, and human-machine interface with onsemi's leadership in intelligent power and sensing," according to Synaptics CEO Rahul Patel. "The all-stock structure allows our shareholders to participate in the compelling growth and value creation opportunities ahead."Onsemi estimates the transaction to be accretive to its adjusted earnings on a per-share basis within 18 months of completion and to generate $200 million in annual synergies.The deal has the potential to boost sales through cross-selling and channel scale and lift margins via cost savings and some manufacturing integration, Truist Securities said in a note. However, the brokerage said it appears to shift focus away from data centers, "and leaves us scratching our head."Onsemi reiterated its second-quarter outlook provided in May. At the time, the company said it expected adjusted EPS to be in a range of $0.65 to $0.77 and revenue to come in between $1.54 billion and $1.64 billion.Synaptics also reaffirmed its fiscal fourth-quarter guidance issued in May for adjusted EPS of $1.20, plus or minus $0.15, and revenue of $305 million, plus or minus $10 million.
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